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Posted January 2016

 

USA – AB-InBev hopes to reconquer lost ground in Colorado

It’s so easy to get hoodwinked by the big guys. When shortly before Christmas 2015 AB-InBev picked up two U.S. craft brewers – Breckenridge in Colorado and Four Peaks in Arizona – the craft beer commentariat around the world screamed “oy vey”.

When AB-InBev bought a few distributors last year, only a few insiders pulled a frown. Why is this so? Because craft brewing is sexy, while distribution is dull?

In the case of AB-InBev’s recent acquisitions, we need to look at the full picture. In actual fact, it is through the acquisition of Breckenridge and two distributors in Colorado that AB-InBev hopes to recover lost ground in this federal state.

What makes Colorado such a battle ground is that it eventually could turn into a “swing state”, meaning that if AB-InBev continues to lose beer sales there, in the long run craft and imports could outsell the two major brewers. AB-InBev and MillerCoors should be haunted by the specter of Portland, Oregon. In the city of Portland craft beer dominates the retail market with AB-InBev and MillerCoors only enjoying a combined market share of about 40 percent, according to estimates. Read on

 

USA – As yet unopened craft brewer makes offer for AB-InBev

These guys have a great sense of humour. The soon-to-be opened Lincoln’s Beard Brewing Company from Miami, Florida, at the end of December 2015 made an offer for the world’s major brewer. They did not stint. They offered the grand total of USD 26,000 dollars. Incidentally, they have not had a reply from AB-InBev yet. We wonder why? Read on

 

Belgium – Beer consumption dropped an estimated 3 percent in 2015

Brewers and the weather: an old story. Apparently, the weather cannot suit everyone. While warmer temperatures usually serve beer consumption (and brewers’ sales), it is a nuisance for Belgium’s Lambic brewers, who fear for their production volumes.

The Cantillon brewery in Brussels late last year complained that climate change has forced them to temporarily halt production. Because of an unusually warm autumn leading to balmy nights, they could not cool their spontaneously fermenting sour Lambic beers in the open. For this they need really low temperatures.

In the past their brewing season would run from mid-October to early May. These days it’s from November to end in the end of March or early April.

Not to worry: Cantillon still produces around 400,000 bottles a year and receives 50,000 visitors.

Cantillon may feel a victim of climate change, but they certainly know how to spin a good story. Their complaint made the media rounds just ahead of the 2015 UN climate change conference in Paris. Read on

 

UK – Camden Town Brewery loans boss GBP 2,000 for birthday party

Tut, tut. Was Jasper Cuppaidge, founder of Camden Town craft brewery, so hard up that he had to take a loan from his company before its sale to AB-InBev, UK media huffed and puffed in early January 2016.

According to documents, Camden Town Brewery gave its founder a GBP 2,000 (USD 2,800) loan to help pay for his 40th birthday bash, just months before his brewery was sold to AB-InBev for an estimated GBP 85 million (USD 120 million), of which Mr Cuppaidge and his friends are expected to pocket a cool GBP 80 million.

The loan to Mr Cuppaidge was lumped in with GBP 11,820.82 (USD 16,700) of “seller indebtedness” that Camden shareholders owed the business at the time it was taken over. Read on

 

UK – Jürgen Klopp to become Warsteiner Beer Ambassador

Liverpool boss Jürgen Klopp has signed a four-year contract to become an ambassador for the German beer brand Warsteiner. The former Dortmund manager says his love of beer was the main reason behind him entering into the partnership to promote the brand’s non-alcoholic variety. Read on

 

Belgium – AB-InBev and 34 multinationals received sweetheart tax deals

Ireland, Luxembourg, Switzerland – Europe’s list of tax havens is long. And it’s getting longer. On 11 January 2015 the European Commission ruled that about 35 multinational companies, including brewer AB-InBev, have received tax sweeteners from Belgium so generous as to amount to illegal state aid.

It has ordered Belgium to revise its tax settlements with the companies concerned, charging them combined additional taxes of EUR 700 million (USD 760 million).

According to media reports, the European Commission objected to Belgium’s so-called “excess profit” tax regime. It assumes “that multinationals should be entitled to tax breaks because they have economies of scale. In practice it allows some international groups to reduce their Belgian tax burden by up to 90 percent,” The Guardian newspaper says. Read on

 

Vietnam – Beer sales up 10 percent in 2015 amid rising competition

Same procedure every year. The announcement of annual beer production figures in Vietnam is usually accompanied by a bit of cacophony from the nomenklatura, some calling for further privatisations of the state-owned breweries with others reject such claims.

In 2015, Vietnam’s beer production grew about 10 percent to 34 million hl. The state-controlled Sabeco continued to lead with 14 million hl beer, followed by Heineken’s Vietnam Brewery with 7.2 million hl, the state-owned Habeco with 6.7 million hl and Carlsberg with 2.3 million hl. These four brewers accounted for 88.4 percent of the market, it was reported.

What must have been worrying for the communist rulers is that last year the state-controlled breweries underperformed the general market. Their beer production was up, but their market shares decreased.

Sabeco only saw a 2.2 percent growth in output last year, while Heineken’s unit surpassed Habeco to become the number two brewer in terms of output.

Beer is a strategic industry in Vietnam, as it contributes around 3 percent to the country’s GDP, officials say.

Hence there have been renewed calls, both from the communist party and from foreign brewers, for the state to sell down its stakes in Sabeco and Habeco.

After Sabeco’s IPO eight years ago, the state still owns a controlling 89.59 percent in the company and there have been plans to unload over 51 percent of Sabeco’s equity. Nothing has come of this yet. The Dutch brewer Heineken is currently the only foreign shareholder in Sabeco with a five percent stake.

But in an effort to pre-empt such plans, Sabeco said on 26 December 2015 that it will not sell a major stake to overseas investors, even if foreign companies, including two Thai tycoons, are vying for ownership in the state-owned brewer

In November 2014 Thai Beverage, the maker of Chang beer, approached the Vietnamese government with a USD 2 billion offer for Sabeco, but was rebuffed.

Perhaps more troubling for Sabeco, on 25 December 2015, the Singha Group, a Thai conglomerate that produces the namesake beer, bought stakes valued at USD 1.1 billion in the Masan Group, Vietnam’s largest private-sector company with interests ranging from beer to consumer foods to banking and resources. Singha will take a 25 percent stake in Masan Consumer Holdings and another 33.3 percent stake in Masan Brewery. In December Masan opened a 1.0 million hl brewery in the Mekong Delta near Saigon, which produces beer under the brand name Su Tu Trang.

In May 2015 AB-InBev started production at its brewery in the southern province of Binh Duong, with an annual capacity of 500,000 hl beer. The company is going to increase its output to 1.0 million hl per year and is now aggressively advertising on TV.

Imports of beer have also increased in recent years, despite the government raising tariffs.

Whether the two state-owned breweries will be able to grow in sync with the beer market, which is projected to rise to 40 million hl by 2020, is an open question.

 

UK – Investors oversubscribe AB-InBev USD 46 billion bond deal

There is so much money sloshing around the globe, trying to find a new home that AB-InBev had no trouble selling USD 46 billion in bonds. Actually, AB-InBev’s bond offer was heavily oversubscribed: it could have sold more than USD 110 billion on 13 January 2016, reports the Financial Times. Still, it was the second largest corporate bond offer on record. Read on

 

USA – New Belgium brewery rumoured to seek a sale

Just when everybody thought that Colorado’s New Belgium, the brewer of Fat Tire Amber Ale, was safe after its founder Kim Jordan in 2012 had sold a 41 percent controlling interest to its employees, word leaked in late December 2015 that the company is considering selling.

Why, oh why? Mostly likely, the now 100 percent employee-owned company has a sizable debt load from the buyout and the construction of a USD 140 million new brewery in Asheville, North Carolina. Maybe it is just exploring its options. Read on

 

South Africa – AB-InBev now listed on Johannesburg Stock Exchange

AB-InBev is moving swiftly towards its merger with SABMiller. Two days after selling USD 46 billion in bonds to fund the SABMiller deal, on 15 January 2016 the Belgian company completed a secondary listing in South Africa.

AB-InBev’s CEO Carlos Brito said the listing of the company in Johannesburg was “a significant vote of confidence in South Africa as an investment destination.” Read on

 

UK – How many calories in your beer?

In early January 2015, AB-InBev confirmed its plans to provide consumers with full ingredient and nutritional information for its beers, probably in a bid to stem the obesity crisis. Well, they did not say as much.

The roll-out will begin this year and cover at least 80 percent of European volumes by the end of 2017. Full information on all AB-InBev brands is already available online via www.tapintoyourbeer.com.

Though it is not currently a legal requisite to display calorie information on beer packaging in Europe, it is anticipated that it will become so in the near future. Diageo has also committed to a similar undertaking. Read on

 

Italy – Obituary: Margarethe Fuchs, matriarch of the Forst brewery died 8 December 2015, aged 97

She was a force to be reckoned with. Margarethe Fuchs, who was actually a brewer by training at a time when few women would consider such a job, not only managed to defend the Forst brewery’s home turf in South Tyrolia, she also made sure that Forst to this day remains one of the few privately-owned breweries in Italy. Read on

 

UK – Bids for Peroni and Grolsch due this month

It will be interesting to see how much Peroni and Grolsch will fetch when offers for the two businesses are tabled this month. Indicative offers are due in mid-January, with a tight schedule for due diligence in order to clinch a deal by early March, media say.

In December 2015 AB-InBev said a number of SABMiller's European premium brands and related businesses – including Peroni, Grolsch and UK-based Meantime - will be offered for sale to help the takeover gain regulatory approval. Any sale may include one or more of these brands or businesses and will be conditional upon closing of the acquisition of SABMiller by AB-InBev.

Media report that Peroni, an Italian lager brand that SABMiller picked up in acquisitions between 2003 and 2005, has more than doubled in value since and may be worth about EUR 938 million, according to analysts at Jyske Bank.

Dutch beer Grolsch has not fared as well. Bought for about EUR 878 million in 2008, the company might now fetch about EUR 268 million, the brokerage said.

Others give the two businesses a much higher valuation, namely north of EUR 1.8 billion (USD 2 billion), based on a combined EBITDA of EUR 120 million to EUR 150 million and a possible multiple of around 12 times EBITDA.

Meantime, a London craft brewer that SABMiller agreed to buy only in May 2015, is also among brands being considered for sale, AB-InBev said.

Already, Molson Coors has agreed to acquire SABMiller’s 58 percent stake in the MillerCoors U.S. joint venture for USD 12 billion.

Due to its strong position in Europe, Heineken has been ruled out as a buyer for Peroni and Grolsch, whereas Carlsberg has ruled itself out. Its Chairman

Flemming Besenbacher was quoted as saying on 4 January 2016 that Carlsberg no longer had an ambition to be the fastest-growing brewer in the world and had no acquisition plans.

The comments built on similar signals from Carlsberg’s CEO Cees ’t Hart. Since joining the brewer in June 2015, he has revamped the brewer’s strategy and cut jobs ahead of a strategic review announcement scheduled for the end of the first quarter. The brewer is under pressure to reduce costs.

Carlsberg said on 5 January 2016 it has agreed to sell its Danish Malting Group (DMG) unit for an undisclosed amount to Viking Malt as it divests assets. DMG has three malting plants (one in Denmark and two in Poland) with a combined annual capacity of 220,000 tonnes and an annual turnover of approximately DKK 700 million (USD 100 million).

So who could buy Peroni and Grolsch? Allegedly, Asahi, Spain’s Mahou-San Miguel and buyout firms such as KKR are among those considering bids. Asahi may be prepared to spend as much as 400 billion yen (USD 3.4 billion) on the two.

Also, Paul Walsh, formerly Diageo’s CEO is rumoured to ponder a return to the beverage industry amid reports he will team with private equity house TPG Capital to consider a GBP 2.0 billion (EUR 2.7 billion) bid for AB-InBev’s European rejects.

Some analysts say that AB-InBev would favour a deal with one of the private equity outfits because it could sell all the brands as a job lot and bypass regulatory issues. Besides, a private-equity sale would give AB-InBev the opportunity to buy back the assets at a later stage. This is what AB-InBev did in Korea, where it sold the Oriental Brewery to KKR in 2009 only to re-acquire it in 2014.

 

USA – How many craft beer breweries worldwide?

It is no secret that the U.S. craft beer industry has boomed. But what of the craft brewery situation elsewhere? Are other countries experiencing a similar rise in craft brewing? As data are scarce, the yeast expert Alltech did its own research and discovered that there are more than 10,000 craft breweries worldwide. Read on

 

USA – AB-InBev buys two acclaimed craft brewers

In case you wondered why AB-InBev shortly before Christmas last year clinched deals with two more U.S. craft brewers – Four Peaks in Arizona and Breckenridge in Colorado – the answer is: “It’s the geography, stupid!

After Goose Island (Chicago), Blue Point (New York), 10 Barrel and Elysian (Northwest) and Golden Road (California), AB-InBev has now added Arizona’s largest craft brewer Four Peaks and one of Colorado’s oldest craft beer companies, Breckenridge Brewery, to its stable of craft beer brands. Read on

 

United Kingdom – AB-InBev buys London craft brewer Camden Town

How bizarre: Only three weeks after AB-InBev put the London craft brewer Meantime on the market in order to assuage worries that European competition regulators might have about the AB-InBev+SABMiller tie-up, AB-InBev on 21 December 2015 announced that it has taken over the craft brewer Camden Town, a similar brand to Meantime. Insiders wonder: why does AB-InBev think that Meantime will not pass muster with the antitrust people but Camden Town will?

AB-InBev did not disclose how much it paid to get its hands on London’s Camden Town Brewing Company, but UK media say the deal values the 60,000 hl brewery at about GBP 85 million (USD 127 million). Read on

 

USA – Timing of MillerCoors’ decision to shut the Eden brewery raises eyebrows

It was only a matter of time. Due to the decline in beer sales, MillerCoors, the joint venture between Molson Coors and SABMiller, decided to close down one of its eight U.S. breweries. The decision was made public in September 2015 and will affect the Eden brewery in North Carolina, which has 520 employees. It is to shut in September 2016.

The Eden brewery was built by the Miller Brewing Company and opened in 1978. It has an annual brewing capacity of 9 million barrels beer, but in 2014 only produced about 7 million barrels.

Although MillerCoors expanded its Eden plant just five years ago with the addition of about 70,000 square feet of warehousing space, the decision to close it was ostensibly due to “significant overlap in distribution” between it and the company's Shenandoah brewery in Virginia, which is around 200 miles away, and younger. It was built in 2007 at a cost of USD 300 million.

Incidentally, the decision, which would eliminate roughly 10 percent of MillerCoors’ total production capacity and destroy about 450 Teamster jobs, was announced on 14 September 2015, two days before merger talks between AB-InBev and SABMiller became public. Read on

 

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